Google’s Wiz Acquisition Could Bring Investors Back to Israel

Alphabet, Google’s parent company, is currently in talks to acquire Wiz.ai, an Israeli cloud cybersecurity company, for $23 billion. The landmark deal could set records as the largest acquisition of an Israeli company in the country’s history, as well as the largest acquisition ever by the monolithic tech company responsible for the world’s leading search engine.

In an interview with ISRAEL21c, Dror Bin, an industry veteran and CEO of the Israel Innovation Authority, gave his thoughts on the significance of this potential acquisition.

Israel21c: First of all, how likely is this deal to happen? People are talking about it as if it’s a sure thing, but so far there’s no official statement saying, “Yes, we’re absolutely going to go ahead with this deal.”

Dror Bin: In my experience, nothing is done until the deal is done. There is still a process of commercial negotiation, closing and approval from the various authorities. This is a process that can take a few months. Although it is difficult to assess the probability, I think that both parties are very interested in reaching an agreement and signing the agreement.

I21c: Why is Google so interested in acquiring Wiz?

DB: Google currently does not have a major cybersecurity player in its portfolio. It competes with Amazon and Microsoft on cloud services, and both companies have clear cyber strategies. The acquisition of Wiz could fill this gap for Google, particularly in the cloud security space.

I21c: What makes Wiz worth so much money to Alphabet?

DB: Wiz is truly exceptional. They were founded only four years ago and have already reached hundreds of millions of dollars in revenue. Their growth rates are phenomenal – it’s very rare to see such rapid growth in this industry. Their technical solution and business model are very competitive.

I also assume that Google did their own homework and checked all the other possibilities in the market and found that Wiz was the best fit for their strategy.

I21c: To take a step back, this deal comes at a difficult time for the Israeli high-tech sector and the country as a whole. Do you think this is a sign of growing international confidence in Israel?

DB: It is certainly a sign of confidence. The fact that a multinational acquires an Israeli company for such a large sum means that it believes in the strength of the Israeli technology hub and its ability to continue producing despite the challenges. It suggests that it is thinking about the medium and long-term potential.

When people look at Israel from abroad, they think that in the short term – which could be weeks or months – the war will be over. And in the medium and long term, the fundamentals of the Israeli tech hub are strong: the human talent here, the very bold entrepreneurs we have locally, the savvy investors.

I21c: International investment in Israel has taken a hit in 2023 due to the controversy surrounding the current government’s attempts at judicial reform, and the Gaza war has certainly done little to reverse that trend. Do you think this deal could influence other international investors to put Israel back in their portfolios?

DB: Yes, I think it is possible. Investors generally do not like uncertainty and many of them might be inclined to postpone their decisions in times of war to see how things develop. But seeing a company like Google make such a bold decision might make other investors and multinationals think twice before refraining (from investing in Israel).

I21c: There is also a trend among new Israeli startups to register their companies abroad for many reasons, ranging from better global perception to avoiding economic uncertainty. Do you think this deal could have an impact on this trend?

DB: No, I don’t think it will have an influence on early-stage entrepreneurs. I think they have a lot to think about when deciding where to register their business… I don’t see a connection between that.

I21c: As part of this agreement, what do you think Alphabet’s intentions are regarding the company’s personnel and operations? Is there any plans to relocate?

DB: I don’t have any inside information, but Google already has a big presence in Israel with about 2,500 employees and a very large R&D center. I don’t see why they would have to move people from here if they are already so invested.

We can also learn from the past: the same entrepreneurs (behind Wiz) sold their previous company to Microsoft and it became a very large R&D center for Microsoft in Israel, which continues to expand.

Given these two points, I think it is more likely that Google will maintain its R&D center in Israel and probably even expand it. But all options are on the table. I cannot speculate on their decisions.

I21c: Looking ahead, do you see more big deals like this on the horizon?

DB: Absolutely. I think now is the time for a lot of acquisitions, and not just for Israeli companies. Valuations have become more realistic after the 2023 adjustments, and 2024 seems like a good time for acquirers to buy solid business and technology assets at reasonable prices. While we won’t see many deals of this magnitude, I expect to see more acquisitions coming.